UBS: Raise target price of HKEX (00388) to HKD 430, maintain "Neutral" rating.

UBS released a research report stating that it has raised its forecasts for the Average Daily Turnover (ADT) of HKEX (00388) in 2025, 2026, and 2027 by 14%, 9%, and 8% respectively, to HK$218 billion, HK$185 billion, and HK$208 billion. Earnings per share forecasts have also been raised by 5%, 2%, and 4% to HK$11.9, HK$10.5, and HK$11.5. The target price has been raised from HK$393 to HK$430, and the "Neutral" rating is maintained. The bank expects HKEX's second-quarter net profit after tax (NPAT) and revenue to increase by 35% and 30% respectively to HK$4.3 billion and HK$700 million, 11% and 7% higher than market expectations, mainly due to better-than-expected Net Investment Income (NII). The bank forecasts a 16% year-on-year increase in NPAT and revenue to HK$15 billion and HK$30 billion respectively for the full year. The bank noted that the second-quarter Average Daily Turnover (ADT) increased by 95% year-on-year to HK$238 billion, close to the peak of HK$243 billion in the first quarter; the proportion of northbound funds further increased to 24% during the period. Looking ahead to the second half of the year, the bank expects ADT to adjust to HK$197 billion, compared to HK$240 billion in the first half. The new stock market remains active, with approximately 200 companies waiting to list, mainly in technology, healthcare, and consumer sectors. As for NII, the bank estimates second-quarter NII to reach HK$1.5 billion, a 28% and 14% increase year-on-year and quarterly, and expects the impact of the decrease in HIBOR to be limited. Looking ahead, the bank expects NII to decrease gradually as the renewal interest rates on fixed deposits will decrease.